Andrea Thomas

Nektaria Stamouli

BERLIN—German Chancellor Angela Merkel on Friday signaled she wouldn’t intervene in the conflict pitching the Greek government against its creditors over its decision to give low-income pensioners a Christmas bonus.

The spat comes amid concern in the eurozone that the country’s seven-year debt crisis could flare up again as Athens deviates from its strict fiscal obligations under a longstanding bailout deal.